Party political funding – a personal view

The political battle over lobbying, undue influence and party political funding is certain to intensify in the run up to the 2015 General Election. The skirmish over the influence of Unison over the Labour Party, following allegations of candidate selection rigging in the Falkirk constituency, or revelations that over half of Conservative Party donations come from the City of London in the week when it appeared watchdog powers were being watered down in the banking reform bill, are merely the most recent signs.

It appears that we have not made any progress from the 2005 General Election, where the question of loans to political parties to fund their general election campaigns led to Sir Hayden Phillips chairing a review of party funding from May 2006. The final Phillips Inquiry Report, ‘Strengthening Democracy: Fair and Sustainable Funding for Political Parties‘, was published on 15 March 2007, with all party talks to agree on the way forward starting on 15 May 2007. Predictably, the talks were suspended in the absence of any agreement on implementation of the report in October 2007.

Key recommendation of the Phillips Inquiry Report included:

political donations cap of £50,000

spending limits of £150 million per party per Westminster election cycle

£100,000 spending limit for by-elections

public funding of political parties to match donations made by persons on the electoral register, to a limit of £10 million per year

public funding of political parties at a rate of 40p per vote at a general election, 20p per vote at Scottish Parliament, Welsh Assembly and European Parliament elections

In the absence of any cross-party consensus, the Labour Government’s Ministry of Justice published a White Paper, ‘Party ﬁnance and expenditure in the United Kingdom‘ in June 2008. This tinkered with the Phillips Inquiry recommendations, but ultimately did not go further than being mere proposals. The more interesting suggestions included:

retaining an annual limit on spending in addition to a limit per parliamentary cycle, with discussion that this should be around £15m per year

strict controls on third party campaign spending (with a modest cap proposed)

no limit on donations until controls on third party spending agreed

The more recent Commons Library Note dated 25 June 2013 has reviewed the latest position on party political funding. Its finding on progress can easily be summarised: there is no progress. This is despite the Coalition Agreement including:

We will also pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics.

In my mind there needs to be a link established between party membership and party political funding. It is clear that since 1950, party membership of the main parties has been in steady decline, as reported by a Commons Library Note dated 3 December 2012.

Introducing public funding on a pence per vote model, as proposed by the Phillips Inquiry, merely rewards the two or three main political parties in our current first-past-the-post (FPTP) system. Why should a smaller party, maybe with no representation in Westminster, be penalised as a result of the bias in the FPTP system? Funding linked to membership seems to be a much more fair way of progressing.

Rather than address funding directly, I would consider controlling spending. As the Phillips Inquiry Report and White Paper discuss, some forms of canvassing and campaigning are very low cost, such as open public meetings and hustings. I would propose that party political spending be limited by reference to a spending limit per registered party member, with a political donations cap of £50,000, as proposed by Phillips, for each Westminster election cycle.

To calculate what would be an appropriate limit per party member, I would use the current spending limits as a target figure. I considered, in these austere times, that the current £20 million cap on election sending be reduced to £15 million, as proposed in the 2008 White Paper, and that this be used as the target to limit spending in a Westminster (5 year) cycle, as recommended by Phillips, to £75 million (ie half of the Phillips level).

On the basis that a strong political party in the UK could be expected to have at least 150,000 members, I would suggest a spending limit of £500 per member per cycle. These would need to be full members, so for affiliated trade unions to the Labour Party, the trade union members would need to be opted-in to be members of the Labour Party.

It might be argued that such a spending limit favours the Labour Party, on the basis that there are a large number of members of trade unions affiliated to the Labour Party. However, as explained above, these individuals would need to opt-in to membership of the Labour Party; there is no reason to suggest that all trade union members would do so. There is also no reason why this system should prejudice the Conservative Party. As the Commons Library Note sets out, at one point the Conservative Party had members in the millions. Rather than plead bias, the Conservative Party ought to address the question of its dying membership.

Who am I kidding? Whilst the ability to legislate for party political funding, as with reform of the UK voting system, lies solely in the hands of politicians with no incentive to change either system, nothing will happen.